BOC governor shortlist down to two candidates

Prime Minister Justin Trudeau’s search for a successor to Bank of Canada governor Stephen Poloz is entering its final days with the government having already reduced the shortlist of candidates to two, according to people familiar with the matter.

As Poloz prepares to step down on June 2, the pressure is on Trudeau’s finance minister, Bill Morneau, to name a replacement to allow for a transitional period at a time when the central bank is on the front lines of fighting the economic fallout of the coronavirus.

Poloz’s top deputy, Carolyn Wilkins, who has played a key role in the central bank’s response to the crisis, is one of the remaining contenders, according to the people, who spoke on condition they not be identified because the matter is confidential.

While the second name has yet to emerge in public, Blackrock Inc.’s Jean Boivin is no longer in contention.

Tiff Macklem, dean of the University of Toronto’s management school and a former central bank official, regularly features in speculation, though it’s unclear whether he has sought the position.

Whoever gets the nod will inherit a tough assignment, one that’s dramatically different even from when candidates were formally interviewed in February and early March. In an effort to stabilize an economy grappling with a pandemic and tumbling oil prices, Poloz has cut the benchmark interest rate to near zero, injected tens of billions in cash into the banking sector and started purchasing government debt. On the one hand, the Bank of Canada’s role in the crisis is a secondary one, as monetary policy plays second fiddle to emergency government spending.

On the other, the stakes have never been higher for the governor of a central bank that must fund an unprecedented level of government borrowing. The situation is fraught with risk for the next governor, as the central bank’s deficit-financing role threatens to politicize the institution and erode its independence. The job will require some backbone.

“You need someone forceful,” Mark Chandler, head of fixed income research at Royal Bank of Canada, said in a telephone interview. “There does have to be some pushback.”

With the central bank still in the thick of its emergency response, Wilkins would offer the most continuity. Her leadership role in keeping financial markets functioning has given her an opportunity to build credibility with key players such as the heads of Canada’s commercial banks, a group that has plenty of sway over who becomes governor. Perhaps more importantly, the crisis has allowed Wilkins, 56, to work closely with Morneau, whose ability to get along with the next governor will be key to the job.